This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/8/2016

Overview    

Infrastructure needs in India are estimated to be in the $1.5 – $2 trillion range. The Indian government has a strategic focus on economic development and has initiated a dramatic nationwide program to build 100 Smart Cities.  In practice, this will mean a wide variety of major infrastructure projects across the country that will be funded by the central and state governments over the next few years along with private sector capital.

U.S. President Obama and Indian Prime Minister Modi agreed to establish an "Infrastructure Collaboration Platform" to identify projects and encourage U.S. company participation in a strategic and structured way.  The U.S. Department of Commerce signed an MOU with the Indian Ministry of Finance to implement this platform.  In recognition of cutting-edge U.S. technologies, products and services, the Government of India (Ministry of Urban Development) is encouraging the U.S. government and U.S. companies to take the lead in developing Smart City projects in three major urban areas:

1.  Ajmer, in the state of Rajasthan
2.  Allahabad, in the state of Uttar Pradesh
3.  Vishakhapatnam, in the state of Andhra Pradesh

In May 2015, Prime Minister Modi launched the Smart City Challenge program, a nationwide initiative where the Ministry of Urban Development was tasked to support 100 Smart cities development across India. The plan included providing monetary support of $50 million each year for next five years as the seed money for development. In October 2015, 100 cities submitted their proposals, which included each city’s vision, mission and plan for its Smart City. In March 2016, the Ministry of Urban Development announced the first 20 cities selected which will get support from the Central Government. The first 20 cities are: Bhubaneswar (Odisha), Pune (Maharashtra), Jaipur  (Rajasthan), Surat (Gujarat), Kochi (Kerala), Ahmedabad (Gujarat), Jabalpur (Madhya Pradesh), Visakhapatnam (Andhra Pradesh), Solapur (Maharashtra), Davanagere (Karnataka), Indore (Madhya Pradesh), New Delhi (Municipal Council Delhi), Coimbatore (Tamil Nadu), Kakinada (Andhra Pradesh), Belagavi (Karnataka), Udaipur (Rajasthan), Guwahati (Assam), Chennai (Tamil Nadu), Ludhiana (Punjab), Bhopal (Madhya Pradesh).

Funding infrastructure projects remains a challenge, so the Indian Government is looking for creative solutions and participation by both the public and private sectors. The Department of Commerce is working within the inter-agency (Department of State, Agency for International Development, Trade and Development Agency, the Department of Energy) and multilateral development banks (Overseas Private Investment Corporation, Asian Development Bank) to support U.S. company participation in a range of infrastructure projects. 
                                                                      

Sub-Sector Best Prospects                                                                  

Key Priority sectors and sub-sectors under Smart Cities include:
 

  • Power:  Solar and other renewable, thermal, energy efficiency, and smart grids

  • Water and Sanitation: Recycling, water treatment, sewage, desalinization plants, water recycling

  • Transportation: Railway equipment and systems, airports and air traffic control systems, aircraft maintenance, repair and overhaul, and cold chain

  • Safety and Security: Security modernization, safe cities, integrated traffic management

  • Healthcare: Hospital design, construction, operations and management, healthcare IT, and emergency management systems


Two other sub-sectors that are of strategic focus to CS India are:

Ports and Marine Technology

India has an extensive coast line of 4,671 miles and operates 12 major ports (federal) and 187 minor ports (state and private). These ports move 95% of the country’s trade by volume and 70% by value through the maritime transport

The total volume of traffic handled by Indian ports in FY2014–15 was 1052.1 million tons per annum (MTPA), of which 55.25% (581.3 MTPA), was handled by Major Ports and the remaining 44.75% (470.9 MTPA) was handled by Non-Major Ports.

India expects traffic at major (federal) ports to reach 1.2 billion tons by 2020, and traffic at minor (state and private) ports to reach 1.2 billion tons. India’s 12th Five-Year Plan (2012-2017), calls for about $28 billion to be invested in the port sector and would include new terminals, inland water systems, upgrades of existing berths, and modernization of operations. 

Anticipating the volume growth of the ports and maritime sector, the Government of India has announced a number of initiatives to facilitate and grow the trade. More than 150+ projects have been identified for strengthening infrastructure and increasing the total cargo handling capacity of the country both by greenfield port development and capacity addition to existing ports. Apart from capacity addition, port efficiencies are being set to be improvised through mechanization and modernization.

The Shipping Ministry is the primary nodal agency for ports and shipping, including shipbuilding and ship repair, major ports and inland water transport. As per government policy, 100% FDI is allowed in port development projects and a 100% income tax exemption is extended to companies investing in port infrastructure, in addition a 10-year tax holiday has also been extended to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports.

Railways

Current Status

India has the world's third-largest railway network under single management. It has 0.24 million wagons, 63,870 coaches and 9,549 locomotives. Indian Railways operates more than 19,000 trains daily.  As of 2015, Indian Railways had a total route network of 64,600 kilometers spread across 7,172 stations, 12,617 passenger trains carrying over 23 million passengers daily. On the commercial front, 1,101 million tons (MT) of freight were transported via trains in FY15, which is expected to increase to 1,186 MT in FY16.

Market Size

Revenue growth for Indian Railways has been strong over the years. During FY07-15, revenues increased at a compound annual growth rate (CAGR) of 7.9% to reach US$ 26.4 billion in FY15. Revenues are expected to expand at a CAGR of 13.4% during 2007–2020. Freight and Passenger earnings are the two largest components of revenues for Indian Railways. In FY15, Indian Railways generated US$17.7 billion in earnings from commodity freight traffic, much higher than the passenger earnings of US$7.1 billion. In the last eight years, revenues from the commodity freight and passenger segment have expanded at a CAGR of 8.7% and 8.2%, respectively.

Policy Framework

The new Government has undertaken a number of initiatives to attract private capital from domestic as well as foreign investors by adopting investor friendly policies.

The Ministry of Railways has liberalized its policies:

  • 100% FDI under automatic route is permitted in construction, operation, and maintenance of projects through public private partnerships (PPP)

  • Government has invited private sector participation for rail connectivity and capacity augmentation projects through five models with 80% assured investment

  • Decentralization of powers to zonal railways

  • Setting up of constituting innovation council “Kayakalp” for technology and business re-engineering

  • Simplification of procedures and consistency of policy to be ensured

  • Setting up of Transport Logistics Corporation of India (TRANSLOC) to provide end to end logistics solutions at select railway terminals through PPP

  • Prioritizing and setting timelines for completion of the ongoing projects


Vision for Five Years/Objectives:
 

  1. Leveraging Additional Resources – Investment of $132 billion is envisaged for the next five years to be mobilized through multiple sources of investment - multilateral development banks such as World Bank, International Monetary Fund, Asian Development Bank, and pension funds.  

  2. Expand the Indian Railways capacity substantially and modernize infrastructure. 

  3. Project Implementation - Fast tracking sanctioned works on 7000 kms of double/ third/fourth lines and commissioning of 1200 km in 2015-2016. 

  4. Electrification - Acceleration of the pace of railway electrification. 

  5. High Speed Trains –

  • Bullet train proposed for the Mumbai-Ahmedabad corridor with the feasibility study for a bullet train on the Delhi-Mumbai route to be completed in 2016.

  • Invention of Diamond Quadrilateral Network of High Speed Rail connecting major metropolitans and growth centers of the country.

  • Increasing speed of trains to 160-200 kmph in select nine sectors.

  • Freight Trains - speed to increase to 100 kmph from 75 kmph; loading density at major routes to be upgraded to 22.82 ton axle load.


Railway Budget 2016 – Key Points
 

  • Railway Budget 2016 is not big on new project announcements but focuses on passenger amenities and restructuring of railway finances.

  • With a total outlay capped at $ 17.6 billion, the 2016-17 railway budget concentrates on capacity creation in the rail sector and on completion of the ongoing projects rather than announcing new ones.

  • Indian Railways to generate revenues on the order of $ 27 billion next year, 10.1% higher than the revised target of current year.

  • Life Insurance Corporation (LIC) has agreed to invest $ 21.8 billion over 5 years on extremely favorable terms.

  • Will commission 2,800 km of new tracks and proposes to electrify 2,000 km next year.

  • 17,000 bio-toilets and additional toilets to be provided by end of this Fiscal Year.

  • Wi-Fi at 100 railway stations this year and 400 next year

  • Enhanced capacity of e-ticketing system from 2000 tickets/min to 7,200/min.
     

Opportunities                                                                                  

Smart Cities:

Working closely with US companies on the ground in India, and in cooperation with the American Chamber of Commerce in India and the US-India Business Council, we have identified the following target sectors where we believe U.S. companies will be most competitive:

Smart Cities Core Elements
a. Project design and systems integration at the front end of infrastructure projects
b. IT-enabled services
c. Data analytics

Ports and Marine Technology:

These sub-sector prospects present opportunities for U.S. companies providing products and services in the sector

Port Modernization
Indian ports have embarked on a massive port mechanization and modernization program to become more efficient and remain at par with international benchmarks. Under the Sagarmala scheme, three areas have been identified for port modernization:

Mechanization – Productivity at several berths is held back due to old and outdated equipment that are unable to meet the present day requirements. This equipment also underperforms due to lack of proper maintenance. Ports such as Kandla, Haldia and Tuticorin are in critical need of higher capacity equipment to replace existing old ones. Mobile harbor cranes are especially in dire need. Twenty new mobile harbor cranes have been recommended across major ports. Potential projects include improvement of gate processing at Chennai and Jawaharlal Nehru Port, improvement of rake turnaround time, and applying multiple advanced technology based solutions like RFID and OCR based gate processing.

Draft enhancement (Dredging) – The major ports are exploring options to increase draft depth up to 23 meters to match the new generation container vessels with capacity of more than 15,000 TEUs and super tankers. In order to keep pace with accelerating growth in cargo and container traffic, Indian ports would also increase their drafts to handle super max vessels.
Potential Projects. Ennore and Paradip port will be increasing their draft from 16 to 18 meters.

New Terminal Development – There is a potential to increase the capacity at existing ports by building new terminals and berths. Coastal berth to handle food grains and fertilizers in Kandla is one such example. Potential projects include, edible oil terminal in Kochi, uran multipurpose cargo terminal, Nhava creek coastal cargo terminal and ro ro berths for handling automobile exports at Kandla port.

New Port Development
New port locations have been identified based on the cargo flow for key commodities and the projected traffic. Greenfield major ports to be developed at Vadhavan (Maharashtra), Sagar Island (West Bengal), Paradip Satellite Port (Odisha), Cuddalore/Sirkazhi (Tamil Nadu), and Machilipatnam/Vodarevu International Container Transhipment hub at Enayam (Tamil Nadu) and Vizhinjam (Kerala).

Green Initiatives in Ports
“Project Green Ports” initiated by the Ministry of Shipping is targeted to make the major ports across India cleaner and greener. The project will have two verticals – Green Ports initiatives related to environmental issues and Swachh Bharat Abhiyaan. The first initiative includes 12 elements, which will be implemented in a strict, time-bound manner. Some of these initiatives are acquiring equipment required for monitoring environmental pollution, acquiring dust suppression system, setting up sewage/waste water treatment plants, energy generation from renewable energy sources, completion of shortfalls of oil spill response facilities and prohibition on disposal of all kinds of garbage in the sea. Under the Swachh Bharat Abhiyaan, the ministry has identified 20 activities to promote cleanliness at the port premises. Some of the activities include cleaning the wharf, cleaning and repairing of sheds, cleaning and repairing of port roads, painting road signs, cleaning of parks, cleaning and repairing of all drainages and storm water systems, and tree plantation.

Railways:

Investment Opportunities

 

  1. Diamond Quadrilateral Network of bullet trains to connect metropolitan cities

  2. High capacity, high speed dedicated freight corridors to be constructed along the Golden Quadrilateral and its diagonals

  3. Development of identified stations to international standards through PPP mode

  4. Potential of port and mines connectivity through the PPP mode

  5. Setting up of Logistic Parks to modernize logistics operations

  6. Top priority to mechanization of loading and unloading

  7. Bullet train proposed on identified Mumbai-Ahmedabad corridor


Areas of partnerships/collaboration
 

  1. Long/heavy haul for bulk materials

  2. Technology for better wagon designs for improving weight to tare ratio

  3. Retrofitting corridors for high density routes

  4. Technology collaboration in safety and passenger comfort

Web Resources                                                                               

Ministry of Urban Development: http://moud.gov.in/
Smart City: http://indiansmartcities.in/site/index.aspx
Ministry of Shipping: http://shipping.nic.in/
Indian Ports Association: http://www.ipa.nic.in/
Ministry of Railways: http://www.indianrailways.gov.in/railwayboard/ 
Indian Railways: www.indianrailways.gov.in/
All India Railwaymen's Federationhttp://www.airfindia.com/
Make In India: http://www.makeinindia.com/

For more information about opportunities in this sector contact U.S. Commercial Service Industry Specialists:

Infrastructure/Smart Cities: Bhavna Vishwakarma at bhavna.vishwakarma@trade.gov
Ports & Marine Technology: Sham Shamsudeen at sham.shamsudeen@trade.gov
Railways: Renie Subin at renie.subin@trade.gov

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



India Design and Construction Trade Development and Promotion